NZD/USD Forex Technical Analysis – Strengthens Over .6785, Weakens Under .6768

The New Zealand Dollar is trading lower on Friday after failing to follow-through to the upside, following yesterday’s surge to a two-week high. The inability to extend the rally indicates sellers are still in control, leaving the currency vulnerable to further declines.

Thursday’s short-covering rally was primarily fueled by a weaker U.S. Dollar rather than strong demand for the New Zealand Dollar after the Federal Reserve confirmed the market’s hawkish stance by tipping three rate hikes next year.

At 06:08 GMT, the NZD/USD is trading .6783, down 0.0018 or -0.26%.

The Kiwi was also pressured by a report that showed New Zealand business sentiment continued its slide in December, weighed down by concerns over finding skilled labor and rising non-wage cost inflation, according to ANZ Bank.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up on Thursday when buyers took out the previous main top at .6823. A trade through .6702 will change the main trend to down.

The lack of follow-through following the change in trend suggests the move may have been fueled by short-covering or buy stops rather than new buying.

The first minor range is .6868 to .6702. Its pivot is .6785. The second minor range is .6702 to .6834. Its pivot is .6868. The NZD/USD is currently straddling these pivots. Buyers may be attracted to these levels in an effort to form a potentially bullish secondary higher bottom.

On the upside, the resistance is a 50% level at .6878.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the NZD/USD on Friday will be determined by trader reaction to .6785 and .6768.

Bullish Scenario

A sustained move over .6785 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into .6834. Taking out this level will indicate the buying is getting stronger. This could trigger an acceleration into .6868 – .6878.

Bearish Scenario

A sustained move under .6768 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the main bottom at .6702.